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Compensation creep worth keeping eye on

It's annual meeting season. Which means, in my case, that I am sending proxy forms back with rejections of new director slates and my handwritten note: "WHERE are the WOMEN?"

It's also a time when we begin seeing the lists of top-paid CEOs — the Crain's Detroit Business list will run May 19. Compensation in Michigan — even at the big auto companies — generally seems tame compared with the eye-popping numbers you see for Wall Street types.

But even after the economic meltdown, caused in part by many of those same Wall Street types, compensation is back up. Which could be one reason we're seeing a steady drumbeat of populist themes, from raising the minimum wage to tax-the-rich campaigns. In too many companies, there's a big disconnect between life at the top and what's happening on the ground.

In the 1970s, management guru Peter Drucker recommended that a CEO top out at about 20 times the compensation of the typical worker. In reality today, that factor is probably more than 300 times.

Max De Pree, CEO of Herman Miller Inc. for much of the 1980s, was listening.

The company, founded in 1923 by De Pree's father, had employee incentive and profit-sharing plans from the beginning. When Max became CEO, he heeded Drucker's advice and capped his own pay at 20 times the average worker's wages.

The Zeeland-based office furniture company is known for elegantly simple design (think Eames and Aeron chairs) as well as a sense of social responsibility. The pay caps seemed elegantly simple, too.

"When the difference between top and average pay is huge, you have an imbalance," a Herman Miller executive told a business reporter in 1990. "This company is a living organism; it has got to be in balance."

Of course, capping pay could mean serious problems in recruiting top executive talent. Look at the haircuts General Motors Co. and Chrysler Group executives took compared to peers while U.S. taxpayers held the stock.

De Pree wrote several books about leadership, including Leadership is an Art and Leadership Jazz. He took the "servant leadership" theme — that leaders also serve those they lead. How many CEOs do you know who feel that connection?

The Dodd-Frank Wall Street Reform and Consumer Protection Act has a provision that will require companies to report the ratio between top pay for executives and the median salary of company workers. The U.S. Securities and Exchange Commission is supposedly putting rules together on that.

Maybe next year, that will be another data point on Crain's list of top-compensated CEOs.